Group 1 - The focus has shifted from primarily tech stocks to include offshore drilling, supply industry, and shipping sectors such as tankers, containers, and dry bulk [1] - There is an emerging interest in the fuel cell industry, which is still in its nascent stage [1] Group 2 - The individual has a background in auditing with PricewaterhouseCoopers and transitioned to day trading nearly 20 years ago [2] - The experience includes navigating significant market events such as the dotcom bubble, the aftermath of the World Trade Center attacks, and the subprime crisis [2]

Group 1: Company Research - Applied Optoelectronics (AAOI) has a target price of $45, representing a 95.5% upside from the current price of $23.02[3] - Microsoft (MSFT) has a target price of $600, indicating a 15% increase from the current price of $520.58[11] - TAL Education (TAL) has a target price of $15.90, reflecting a 36.3% growth potential from the current price of $11.68[26] Group 2: Financial Performance - Applied Optoelectronics expects revenues of $471 million, $1.29 billion, and $1.91 billion for 2025, 2026, and 2027 respectively[9] - Microsoft reported a quarterly revenue of $76.4 billion, a year-on-year increase of 18%, with a GAAP net profit of $27.2 billion, up 24%[13] - TAL Education's revenue for Q1 FY26 was $574 million, a 38.8% year-on-year increase, with a net profit margin of 5.44%[20] Group 3: Market Trends and Risks - Applied Optoelectronics is positioned to benefit from a 3-5 year upgrade cycle in North American cable television networks[8] - Microsoft faces risks from cloud computing market competition and potential AI development shortfalls[17] - TAL Education's growth is supported by strong demand for its educational products, but it must navigate the long-term impacts of declining birth rates in China[24]

Core Viewpoint - Applied Optoelectronics reported a quarterly loss of $0.16 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.08, but an improvement from a loss of $0.28 per share a year ago [1][2] Financial Performance - The company posted revenues of $102.95 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 1.83%, but showing significant growth from $43.27 million in the same quarter last year [3] - The earnings surprise for the quarter was -100.00%, with the company having surpassed consensus EPS estimates only once in the last four quarters [2] Stock Performance - Applied Optoelectronics shares have declined approximately 37% since the beginning of the year, contrasting with a 7.9% gain in the S&P 500 [4] - The current Zacks Rank for the stock is 3 (Hold), indicating expected performance in line with the market in the near future [7] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.03 on revenues of $118.77 million, and -$0.05 on revenues of $472.84 million for the current fiscal year [8] - The trend of estimate revisions for the company was mixed ahead of the earnings release, which could change following the recent report [7] Industry Context - The Electronics - Semiconductors industry, to which Applied Optoelectronics belongs, is currently ranked in the bottom 31% of over 250 Zacks industries, indicating potential challenges ahead [9]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $103 million, in line with guidance of $100 million to $110 million, representing more than double year-over-year growth and a 3% sequential increase [28][33] - Non-GAAP gross margin was 30.4%, consistent with guidance of 29.5% to 31%, and up from 22.5% in Q2 2024 [31][32] - Non-GAAP loss per share was $0.16, below the guidance range of a loss of $0.09 to a loss of $0.03, primarily due to higher operating expenses [10][33] Business Line Data and Key Metrics Changes - Data center product revenue was $44.8 million, up 30% year-over-year and 40% sequentially, driven by increased demand for 100G and 400G products [10][28] - CATV segment revenue was $56 million, increasing more than eight times year-over-year but down 13% sequentially due to production retooling [10][29] - CRTB revenue decreased 13% sequentially from a strong Q1, as production was retooled for new products [11] Market Data and Key Metrics Changes - 54% of total revenue came from CATV products, while 44% was from data center products, with the remaining 2% from FTTH, telecom, and other segments [28] - The majority of data center revenue (70%) was from 100G products, with 20% from 200G and 400G products [29] Company Strategy and Development Direction - The company is focused on strategic investments in R&D and SG&A to support new customer qualifications for 800G and 1.6T transceivers [8][12] - Plans to expand production capacity for 800G and higher transceivers in both U.S. and Taiwan facilities are underway, with expectations to achieve significant production increases by the end of the year [24][26] - The company aims to return non-GAAP gross margin to around 40% in the long term, with expectations for gradual improvements in the coming quarters [32][88] Management's Comments on Operating Environment and Future Outlook - Management noted strong year-over-year top-line growth and gross margin expansion, despite elevated operating expenses [8][12] - The company anticipates continued growth in data center revenue driven by demand for 100G and 400G products, with potential for 800G revenue in late Q3 or Q4 [29][37] - Management expressed confidence in the long-term demand for their products and the strategic advantage of U.S.-based production [21][36] Other Important Information - The company ended Q2 with $87.2 million in cash and equivalents, up from $66.8 million at the end of Q1 [34] - Inventory increased to $138.9 million, primarily due to raw material purchases for upcoming production [34][35] - The company received a $2 million incentive from the City of Sugar Land for onshoring manufacturing, facilitating expansion plans [27] Q&A Session Summary Question: How is the company managing customer inventories and capacity in the Cable TV segment? - The company has completed inventory build-out for both Motorola and Gainmaker products and expects modest sequential increases in the cable TV business [42][43] Question: What is the status of engagements with tier one customers for 800G transceivers? - The company has multiple engagements with tier one customers and expects to start volume manufacturing soon [45][46] Question: What is the level of vertical integration in the data center business? - The company produces both EMLs and silicon photonics in-house while also sourcing externally to meet customer requirements [52][53] Question: What are the expectations for gross margin improvements? - The company anticipates gradual improvements in gross margin, aiming for mid-30s in the near term and 40% by the end of next year [88][89] Question: What is the reason for the increase in receivables? - Receivables increased due to higher revenue and extended payment terms offered to customers to accommodate additional revenue [83][84]

Part I. Financial Information [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) Unaudited Q2 2025 financial statements show strong revenue growth, improved gross margins, narrowed net loss, and increased liquidity Condensed Consolidated Balance Sheets Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$796,850** | **$547,032** | **+45.7%** | | Cash and cash equivalents | $64,699 | $67,428 | -4.0% | | Accounts receivable, net | $211,452 | $116,801 | +81.0% | | Inventories, net | $138,867 | $88,135 | +57.6% | | Property, plant and equipment, net | $269,386 | $219,235 | +22.9% | | **Total Liabilities** | **$371,869** | **$317,920** | **+17.0%** | | Accounts payable | $132,962 | $104,969 | +26.7% | | Convertible senior notes | $133,936 | $134,497 | -0.4% | | **Total Stockholders' Equity** | **$424,981** | **$229,112** | **+85.5%** | - Total assets increased by **45.7%** to **$796.9 million**, primarily driven by significant growth in accounts receivable and inventories, reflecting increased business activity[10](index=10&type=chunk) - Total stockholders' equity grew by **85.5%** to **$425.0 million**, largely due to capital raised from public offerings of common stock during the period[10](index=10&type=chunk)[17](index=17&type=chunk) Condensed Consolidated Statements of Operations Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YoY Change | Six Months 2025 | Six Months 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue, net** | **$102,952** | **$43,270** | **+137.9%** | **$202,811** | **$83,943** | **+141.6%** | | **Gross Profit** | **$31,162** | **$9,562** | **+225.9%** | **$61,706** | **$17,153** | **+259.7%** | | Gross Margin | 30.3% | 22.1% | +8.2pp | 30.4% | 20.4% | +10.0pp | | Loss from operations | ($15,976) | ($26,244) | +39.1% | ($24,914) | ($47,889) | +48.0% | | **Net Loss** | **($9,098)** | **($26,115)** | **+65.2%** | **($18,270)** | **($49,285)** | **+62.9%** | | **Diluted EPS** | **($0.16)** | **($0.66)** | **+75.8%** | **($0.34)** | **($1.27)** | **+73.2%** | - Revenue for Q2 2025 more than doubled year-over-year, driven by strong demand across key product segments[12](index=12&type=chunk) - Gross margin significantly improved to **30.3%** in Q2 2025 from **22.1%** in Q2 2024, reflecting better product mix and cost management[12](index=12&type=chunk) - Net loss narrowed substantially to **$9.1 million** in Q2 2025 from **$26.1 million** in the prior-year quarter, demonstrating improved operational efficiency and higher sales volume[12](index=12&type=chunk) Condensed Consolidated Statements of Cash Flows Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($116,389) | ($30,470) | | Net cash used in investing activities | ($75,194) | ($12,156) | | Net cash provided by financing activities | $195,993 | $3,097 | | **Net change in cash, cash equivalents and restricted cash** | **$8,062** | **($38,979)** | | Cash, cash equivalents and restricted cash at end of period | $87,195 | $16,118 | - Operating activities used **$116.4 million** in cash, primarily due to a **$94.7 million** increase in accounts receivable and a **$51.0 million** increase in inventories to support revenue growth[20](index=20&type=chunk) - Investing activities used **$75.2 million**, mainly for the purchase of property, plant, and equipment (**$53.9 million**) and equipment deposits (**$21.2 million**)[20](index=20&type=chunk) - Financing activities provided **$196.0 million** in cash, predominantly from a **$195.8 million** net proceed from a common stock offering[20](index=20&type=chunk) Notes To Condensed Consolidated Financial Statements Revenue by Product Category (in thousands) | Product Category | Q2 2025 Revenue | Q2 2024 Revenue | YoY Change | | :--- | :--- | :--- | :--- | | CATV | $56,019 | $5,818 | +862.9% | | Data Center | $44,791 | $34,352 | +30.4% | | Telecom | $1,940 | $2,379 | -18.5% | | Other | $202 | $721 | -72.0% | | **Total Revenue** | **$102,952** | **$43,270** | **+137.9%** | - On March 13, 2025, the company issued a warrant to a subsidiary of Amazon.com, Inc. to purchase up to **7,945,399 shares** at an exercise price of **$23.6956** per share. An initial **1,324,233 shares** vested upon issuance, with the remainder vesting based on up to **$4 billion** in product purchases over 10 years[36](index=36&type=chunk) - The company's top ten customers accounted for **98%** of revenue in Q2 2025, up from **94%** in Q2 2024, indicating significant customer concentration[56](index=56&type=chunk) - As of June 30, 2025, the company had **$133.9 million** in convertible senior notes outstanding, consisting of **$3.5 million** of **2026 Notes** and **$130.4 million** of **2030 Notes** (net carrying amount)[72](index=72&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes revenue growth to strong CATV and data center demand, enhanced liquidity via ATM offerings, and monitors geopolitical risks Results of Operations - CATV revenue surged by **862.9%** in Q2 2025 compared to Q2 2024, driven by the recovery in market demand and the start of a major network upgrade by a key North American MSO customer[122](index=122&type=chunk)[125](index=125&type=chunk) - Data Center revenue grew **30.4%** in Q2 2025 year-over-year, supported by increased orders for **100G** and **400G** products and new business related to generative AI applications[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) - Gross margin improved to **30.3%** in Q2 2025 from **22.1%** in Q2 2024, attributed to higher sales of high-margin products and ongoing efforts to reduce production costs[128](index=128&type=chunk)[130](index=130&type=chunk) - Operating expenses increased by **31.6%** in Q2 2025, primarily due to a **57.6%** rise in R&D expenses to support customer demand for new products and accelerate project timelines[131](index=131&type=chunk)[132](index=132&type=chunk) Liquidity and Capital Resources - As of June 30, 2025, the company had **$87.2 million** in cash, cash equivalents, and restricted cash, along with **$31.2 million** of unused borrowing capacity[145](index=145&type=chunk) At-the-Market (ATM) Offerings in 2025 (in thousands, except share data) | Offering | Completion Date | Shares Sold | Gross Proceeds | Net Proceeds | | :--- | :--- | :--- | :--- | :--- | | First ATM Offering | April 8, 2025 | ~5.7 million | ~$100,000 | ~$98,000 | | Second ATM Offering | June 18, 2025 | ~5.7 million | $100,000 | $98,000 | | **Total** | | **~11.4 million** | **~$200,000** | **~$196,000** | - The company issued a warrant to an Amazon affiliate on March 13, 2025, for up to **~7.9 million shares**, with vesting tied to up to **$4 billion** in product purchases over 10 years[161](index=161&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Market risk exposure is largely unchanged since year-end 2024, but international trade policy risks, particularly U.S.-China, remain significant - The company's exposure to market risk has not changed materially since year-end 2024[169](index=169&type=chunk) - An analysis as of June 30, 2025, confirmed no material revisions were needed to the market risk disclosures from the **2024 Form 10-K**, despite changes in international trade policies[170](index=170&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirmed effective disclosure controls and procedures as of June 30, 2025, with no material changes to internal control over financial reporting - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[172](index=172&type=chunk) - There were no changes in internal control over financial reporting during the second quarter of 2025 that have materially affected, or are reasonably likely to materially affect, these controls[173](index=173&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) No material adverse legal claims are pending, but a $1.0 million sales tax dispute with the Texas Comptroller's Office is ongoing with an indeterminable outcome - The company believes there are no pending legal proceedings that would have a material adverse effect on it[99](index=99&type=chunk)[175](index=175&type=chunk) - A sales tax dispute with the Texas Comptroller's Office for approximately **$1.0 million** is ongoing, with the outcome currently indeterminable[100](index=100&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) Geopolitical tensions and volatile international trade policies, including new U.S. tariffs on Taiwan, pose significant risks to revenue, costs, and supply chain - A key risk factor is the heightened geopolitical tension and uncertainty in international trade policies, especially tariffs and export controls involving the U.S., China, and Taiwan[177](index=177&type=chunk) - As of early August 2025, the U.S. has imposed a **20%** temporary tariff on most imports from Taiwan, effective August 7, 2025, which could directly impact the company's operations[177](index=177&type=chunk) - While not significantly impacted by tariffs on China to date, the company warns that future trade barriers could materially and adversely affect its revenue, operations, and financial condition[178](index=178&type=chunk) [Item 5. Other Information](index=47&type=section&id=Item%205.%20Other%20Information) SVP and Chief Legal Officer David Kuo adopted a Rule 10b5-1 trading plan on May 15, 2025, for the potential sale of up to 44,500 common stock shares - David Kuo, SVP and Chief Legal Officer, adopted a Rule **10b5-1** trading plan on May 15, 2025, for the potential sale of up to **44,500 shares** of common stock[180](index=180&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section indexes all exhibits filed with the Form 10-Q, including corporate governance documents, convertible note indentures, the Amazon warrant, and officer certifications - The Exhibit Index lists all documents filed with or incorporated by reference into the quarterly report, including certifications by the CEO and CFO[181](index=181&type=chunk)[183](index=183&type=chunk)[185](index=185&type=chunk)

[Second Quarter 2025 Performance Highlights](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Highlights) AOI reported strong year-over-year revenue growth and improved gross margin in Q2 2025, driven by strategic investments and robust performance in data center and CATV segments [Management Commentary](index=1&type=section&id=Management%20Commentary) AOI's CEO and CFO expressed satisfaction with Q2 results, highlighting strong year-over-year revenue growth and gross margin expansion, driven by strategic R&D and sales investments in 800G and 1.6Tb transceivers - Revenue and gross margin met expectations, but EPS was below expectations, primarily due to increased operating expenses[3](index=3&type=chunk) - Increased operating expenses resulted from strategic investments in R&D and sales management for **800G and 1.6Tb transceivers** to drive customer engagement and future revenue opportunities[3](index=3&type=chunk) - Both data center and CATV businesses achieved robust growth, with the Taiwan factory receiving **800G product production approval** from a major hyperscale customer[3](index=3&type=chunk) - Monthly production capacity for **800G transceivers is projected to exceed 100,000 units by the end of 2025**, with **40% manufactured in the US**[3](index=3&type=chunk) [Second Quarter 2025 Financial Summary](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Summary) Applied Optoelectronics achieved significant year-over-year growth in Q2 2025, with GAAP revenue reaching $103.0 million and improved gross margin, while net loss narrowed Key Financial Data for Q2 2025 (GAAP vs Non-GAAP) | Metric | Q2 2025 | Q2 2024 | Q1 2025 | Y/Y Change (Q2 2025 vs Q2 2024) | Q/Q Change (Q2 2025 vs Q1 2025) | | :-------------------------- | :------------- | :------------- | :------------- | :------------------------------- | :------------------------------- | | GAAP Revenue | $103.0M | $43.3M | $99.9M | +137.9% | +3.1% | | GAAP Gross Margin | 30.3% | 22.1% | 30.6% | +8.2 pp | -0.3 pp | | Non-GAAP Gross Margin | 30.4% | 22.5% | 30.7% | +7.9 pp | -0.3 pp | | GAAP Net Loss | $(9.1)M | $(26.1)M | $(9.2)M | -65.2% | -1.1% | | GAAP Basic Loss Per Share | $(0.16) | $(0.66) | $(0.18) | -75.8% | -11.1% | | Non-GAAP Net Loss | $(8.8)M | $(10.9)M | $(0.9)M | -19.2% | +877.8% | | Non-GAAP Basic Loss Per Share | $(0.16) | $(0.28) | $(0.02) | -42.9% | +700.0% | [Third Quarter 2025 Business Outlook](index=2&type=section&id=Third%20Quarter%202025%20Business%20Outlook) AOI anticipates continued revenue growth in Q3 2025, with non-GAAP gross margin expected to remain stable, while non-GAAP net loss per share is projected to narrow [Q3 2025 Guidance](index=2&type=section&id=Q3%202025%20Guidance) For Q3 2025, AOI projects revenue between $115 million and $127 million, with non-GAAP gross margin between 29.5% and 31.0%, and non-GAAP net loss per share between $0.10 and $0.03 Q3 2025 Business Outlook | Metric | Q3 2025 Guidance | | :-------------------- | :----------------- | | Revenue | $115M to $127M | | Non-GAAP Gross Margin | 29.5% to 31.0% | | Non-GAAP Net Loss | $(5.9)M to $(2.0)M | | Non-GAAP Loss Per Share | $(0.10) to $(0.03) | | Shares Used | Approx. 62.3M shares | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents AOI's preliminary condensed consolidated balance sheets and statements of operations, along with reconciliations of GAAP and non-GAAP financial measures [Preliminary Condensed Consolidated Balance Sheets](index=5&type=section&id=Preliminary%20Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, AOI's total assets increased significantly to $796.85 million, driven by higher receivables, inventory, and property, plant, and equipment, leading to a substantial rise in shareholder equity Balance Sheet Highlights (June 30, 2025 vs December 31, 2024) | Metric | June 30, 2025 (in thousands of USD) | December 31, 2024 (in thousands of USD) | Change (in thousands of USD) | | :-------------------------------- | :---------------------------------- | :---------------------------------- | :--------------------------- | | Total current assets | $458,338 | $301,268 | +$157,070 | | Property, plant and equipment, net | $269,386 | $219,235 | +$50,151 | | Total assets | $796,850 | $547,032 | +$249,818 | | Total current liabilities | $216,843 | $170,069 | +$46,774 | | Total liabilities | $371,869 | $317,920 | +$53,949 | | Total stockholders' equity | $424,981 | $229,112 | +$195,869 | [Preliminary Condensed Consolidated Statements of Operations](index=6&type=section&id=Preliminary%20Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, AOI reported total revenue of $102.95 million, a significant increase from the prior year, driven by strong growth in CATV and data center segments, leading to higher gross profit and reduced operating loss Revenue by Business Segment (Q2 2025 vs Q2 2024) | Business Segment | Q2 2025 (in thousands of USD) | Q2 2024 (in thousands of USD) | Y/Y Change | | :--------------- | :-------------------------- | :-------------------------- | :--------- | | CATV | $56,019 | $5,818 | +862.8% | | Data Center | $44,791 | $34,352 | +30.4% | | Telecom | $1,940 | $2,379 | -18.4% | | Other | $202 | $721 | -71.9% | | **Total Revenue** | **$102,952** | **$43,270** | **+137.9%** | Key Statements of Operations Metrics (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (in thousands of USD) | Q2 2024 (in thousands of USD) | Y/Y Change | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | | Total Gross Profit | $31,162 | $9,562 | +225.9% | | Operating Expenses | $47,138 | $35,806 | +31.6% | | Operating Loss | $(15,976) | $(26,244) | -39.1% | | Net Loss | $(9,098) | $(26,115) | -65.2% | | Basic Loss Per Share | $(0.16) | $(0.66) | -75.8% | [Reconciliation of GAAP and Non-GAAP Financial Measures](index=7&type=section&id=Reconciliation%20of%20GAAP%20and%20Non-GAAP%20Financial%20Measures) This reconciliation details adjustments made to GAAP figures to derive non-GAAP metrics such as gross profit, net loss, and diluted net loss per share, primarily excluding stock-based compensation, non-cash charges, and unrealized foreign exchange gains/losses Reconciliation of GAAP to Non-GAAP Gross Profit (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (in thousands of USD) | Q2 2024 (in thousands of USD) | | :-------------------------- | :-------------------------- | :-------------------------- | | GAAP Total Gross Profit | $31,162 | $9,562 | | Stock-based compensation expense | $94 | $137 | | Non-recurring expenses | $41 | $32 | | **Non-GAAP Total Gross Profit** | **$31,297** | **$9,731** | Reconciliation of GAAP to Non-GAAP Net Loss (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (in thousands of USD) | Q2 2024 (in thousands of USD) | | :------------------------------------------ | :-------------------------- | :-------------------------- | | GAAP Net Loss | $(9,098) | $(26,115) | | Stock-based compensation expense | $3,164 | $6,058 | | Non-cash charges related to discontinued products | $1,073 | $1,061 | | Amortization of intangible assets | $110 | $100 | | Non-recurring (income) expense | $862 | $1,576 | | Unrealized foreign exchange (gain) loss | $(5,278) | $(107) | | Tax (benefit) expense related to above | $337 | $6,571 | | **Non-GAAP Net Loss** | **$(8,830)** | **$(10,856)** | Reconciliation of GAAP to Non-GAAP Diluted Net Loss Per Share (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :------------------------------------------ | :------------- | :------------- | | GAAP Diluted Net Loss Per Share | $(0.16) | $(0.66) | | Stock-based compensation expense | $0.06 | $0.15 | | Non-cash charges related to discontinued products | $0.02 | $0.02 | | Amortization of intangible assets | $0.00 | $0.00 | | Non-recurring (income) expense | $0.01 | $0.04 | | Unrealized foreign exchange (gain) loss | $(0.10) | $0.00 | | Non-GAAP tax benefit | $0.01 | $0.17 | | **Non-GAAP Diluted Net Loss Per Share** | **$(0.16)** | **$(0.28)** | [Supplemental Information](index=2&type=section&id=Supplemental%20Information) This section provides explanations for non-GAAP financial measures, company overview, forward-looking statements, conference call details, and investor relations contacts [Non-GAAP Financial Measures Explanation](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) AOI provides non-GAAP financial metrics to offer a clearer view of core operating performance by excluding items like intangible asset amortization, stock-based compensation, and unrealized foreign exchange impacts - Non-GAAP metrics aim to eliminate the impact of items unrelated to overall operating performance, such as amortization of intangible assets, stock-based compensation, non-recurring income and expenses, losses on disposal of idle assets, and unrealized foreign exchange gains or losses[11](index=11&type=chunk)[14](index=14&type=chunk) - Non-GAAP metrics are provided to facilitate better comparisons with the company's past performance, current period performance, and industry peers[14](index=14&type=chunk) - Non-GAAP metrics should not be considered a substitute for GAAP financial performance and may not be comparable to similarly titled measures used by other companies[13](index=13&type=chunk) [About Applied Optoelectronics](index=4&type=section&id=About%20Applied%20Optoelectronics) Applied Optoelectronics, Inc. (AOI) is a leading developer and manufacturer of advanced optical and hybrid fiber coaxial (HFC) network products for AI data centers, CATV, and broadband fiber access networks - AOI is a leading developer and manufacturer of advanced optical and hybrid fiber coaxial (HFC) network products[15](index=15&type=chunk) - Its products are fundamental to **AI data centers, CATV, and broadband fiber access networks**, serving tier-one customers in cloud computing, CATV broadband, telecom, and FTTH markets[15](index=15&type=chunk) - The company operates R&D and manufacturing facilities globally, including the **US, Taiwan, and China**[15](index=15&type=chunk) [Forward-Looking Information](index=2&type=section&id=Forward-Looking%20Information) This section serves as a cautionary note for forward-looking statements, highlighting inherent risks and uncertainties that could cause actual results to differ materially from expectations, with no obligation to update - Forward-looking statements reflect management's beliefs and expectations regarding the **Q3 2025 and full-year outlook**[9](index=9&type=chunk) - These statements involve risks and uncertainties, including changes in customer orders, demand, manufacturing, supply chain, pricing pressures, and macroeconomic conditions[9](index=9&type=chunk) - Investors should not consider forward-looking statements as predictions of future events, and the company undertakes no obligation to update these statements[9](index=9&type=chunk) [Conference Call Information](index=2&type=section&id=Conference%20Call%20Information) Applied Optoelectronics will host a conference call and webcast on August 7, 2025, at 4:30 PM ET to discuss its Q2 2025 financial results and Q3 2025 outlook - The conference call and webcast will be held on **August 7, 2025, at 4:30 PM ET**[8](index=8&type=chunk) - Investors can participate by dialing **844-890-1794 (domestic) or 412-717-9586 (international)**[8](index=8&type=chunk) - A webcast and archived version will be available on the company's website at **investors.ao-inc.com**[8](index=8&type=chunk) [Investor Relations Contacts](index=4&type=section&id=Investor%20Relations%20Contacts) Applied Optoelectronics' investor relations are managed by The Blueshirt Group, with Lindsay Savarese as the primary contact - Investor relations contact is **The Blueshirt Group**[16](index=16&type=chunk) - Contact: **Lindsay Savarese**, Phone: **+1-212-331-8417**, Email: **ir@ao-inc.com**[16](index=16&type=chunk)

Core Insights - Applied Optoelectronics, Inc. (AOI) reported strong financial results for Q2 2025, with significant year-over-year revenue growth and gross margin expansion despite a net loss attributed to increased operating expenses [2][6]. Financial Performance - GAAP revenue for Q2 2025 was $103.0 million, a substantial increase from $43.3 million in Q2 2024 and slightly up from $99.9 million in Q1 2025 [6]. - GAAP gross margin was 30.3%, compared to 22.1% in Q2 2024 and 30.6% in Q1 2025 [6]. - The company reported a GAAP net loss of $9.1 million, or $0.16 per share, an improvement from a net loss of $26.1 million, or $0.66 per share in Q2 2024 [6]. Business Segments - The datacenter business showed steady growth, while the CATV business continued to experience strong demand [2]. - Revenue from the CATV segment was $56.0 million in Q2 2025, up from $5.8 million in Q2 2024, and the datacenter segment generated $44.8 million, compared to $34.4 million in the same period last year [18]. Strategic Initiatives - AOI is investing in R&D and SG&A to support new customer qualification efforts for advanced transceivers, which are expected to yield higher customer engagement and revenue opportunities [2]. - The company anticipates producing over 100,000 units of 800G transceivers per month by the end of 2025, with 40% of production occurring in the US [2]. Future Outlook - For Q3 2025, AOI expects revenue in the range of $115 million to $127 million and a non-GAAP gross margin between 29.5% and 31.0% [7]. - The company projects a non-GAAP net loss between $5.9 million and $2.0 million, translating to a loss per share of $0.10 to $0.03 [7].

Company Overview - Applied Optoelectronics, Inc. (AOI) is a leading developer and manufacturer of advanced optical and HFC networking products that serve as essential components for AI datacenters, CATV, and broadband fiber access networks globally [2] - The company provides critical infrastructure to tier-one customers in cloud computing, CATV broadband, telecom, and FTTH markets [2] - AOI has R&D facilities located in Atlanta, GA, and engineering and manufacturing facilities at its corporate headquarters in Sugar Land, TX, as well as in Taipei, Taiwan, and Ningbo, China [2] Upcoming Events - AOI will present virtually at the Rosenblatt 5th Annual Technology Summit: The Age of AI on August 19th, 2025, at 11:00 a.m. Eastern time [1] - The presentation will be conducted by Stefan Murry, Chief Financial Officer and Chief Strategy Officer of AOI [1] - A recording of the presentation will be accessible on the investor relations section of the company's website [1]

Core Insights - Applied Optoelectronics Inc. (AOI) has completed testing and received certification from Charter Communications for its 1.8GHz amplifiers and QuantumLink™ remote management software, facilitating Charter's network evolution project [1][2]. Group 1: Product Development and Certification - AOI's latest HFC networking solutions, including system amplifiers, line extenders, and booster amplifiers, have been certified by Charter, enabling support for symmetrical and multi-gigabit services up to 10 Gbps downstream and 1 Gbps upstream [2][3]. - The Quantum18 amplifier lineup addresses the need for providers like Charter to transition from legacy systems while ensuring compatibility with existing amplifier housings [3]. Group 2: Collaboration and Innovation - AOI collaborates with Digicomm International to enhance the end-to-end experience for ongoing installations, leveraging Digicomm's logistics services for Quantum Bandwidth networking products [2]. - Charter Communications emphasizes the importance of AOI's products in driving broadband engineering innovation, particularly in Distributed Access Architecture and DOCSIS 4.0 network upgrades [4]. Group 3: Company Overview - AOI is a leading developer and manufacturer of advanced optical and HFC networking products, supplying critical infrastructure to tier-one customers across various markets, including cloud computing and telecom [5].

Core Viewpoint - Applied Optoelectronics, Inc. (AOI) is set to release its financial results for the second quarter of 2025 on August 7, 2025, which will be followed by a conference call to discuss the results and the outlook for the third quarter of 2025 [1][2]. Company Overview - AOI is a leading developer and manufacturer of advanced optical and HFC networking products, essential for AI datacenters, CATV, and broadband fiber access networks globally [4]. - The company provides critical infrastructure to tier-one customers in cloud computing, CATV broadband, telecom, and FTTH markets [4]. - AOI has R&D facilities in Atlanta, GA, and engineering and manufacturing facilities in Sugar Land, TX, Taipei, Taiwan, and Ningbo, China [4]. Financial Communication - A conference call and webcast will be held at 4:30 p.m. Eastern Time on the same day as the financial results release, allowing analysts and investors to engage with the company's performance and future outlook [2]. - The conference call will be accessible via a live audio webcast on the company's Investor Relations website, with an archived version available for one year [3]. - A telephonic replay of the call will be available one hour after the call until August 14, 2025 [3].